RICHARD H. CLOSE Businesses and residents of the San Fernando Valley are enthusiastic about the possibility of the Valley becoming a separate city. Over 25 percent of registered voters in the Valley signed petitions calling for a cityhood study by the Los Angeles County Local Agency Formation Commission, or LAFCO. The agency will determine whether the Valley can operate as a separate city with no increases in taxes and whether the assets and liabilities of the city of Los Angeles can be divided in a manner that will not hurt the remainder of the city. If LAFCO results are positive (which most people expect), the voters will decide whether or not to create the Valley as a separate city. The measure has to be approved by a majority of the Valley voters, and a majority of the entire city. Why did 202,000 residents in the Valley sign the LAFCO petition? The central reason, I believe, is that Valley businesses and residents want a local government that will focus on local needs and objectives. For instance, how many businesses have moved out of the Valley because of the city’s archaic and unfair gross receipts tax? Los Angeles businesses are taxed based upon their gross receipts, not profits. That is unfair and wrong. Most cities surrounding the San Fernando Valley do not have a similar tax. The tax may make sense for downtown Los Angeles, but not for the Valley. The government, of course, cannot have a different tax code for different areas of the city. But as a separate city, the San Fernando Valley will have the ability to create its own tax system, which will encourage businesses to locate and expand in the Valley. Currently, most city employees work in downtown Los Angeles. It takes a long time to drive downtown to get city services. You are lucky if the city employee knows anything about your area. Contrast this with the level of service in Burbank. There, city employees are located nearby, they are concerned about your business or neighborhood, and they are knowledgeable about your needs. Can you imagine the benefits if all city employees were focused on making the Valley a better place to work and live? As a separate city, all public transportation tax dollars received from the Valley would stay in the Valley. Currently, most of the sales-tax dollars to be used for mass transit are spent outside the Valley. How many billions of dollars were spent on the subway? Why are we only receiving a stub in North Hollywood? The entertainment business is booming in Burbank. Very little of this business has spilled over into North Hollywood, even though land is much cheaper and readily available. Part of the answer is that Los Angeles has focused on other programs in other areas of the city. As a separate city, the Valley would be able to focus on attracting and retaining businesses right here. Mayor Richard Riordan and other civic leaders acknowledge that there needs to be a restructuring of the city. We were told that charter reform will be the answer. However, the new charter is a compromise that does not fulfill most of the mayor’s goals. The proposed city charter is better than the current charter, but it does not solve most of the problems that exist. Most people look at Burbank and Glendale to see the benefits of a smaller city. However, a more striking example is the city of San Fernando. It has a population of about 24,000 residents, most of whom are not wealthy people. Still, the community has less graffiti and fewer potholes than Los Angeles. Police response time is substantially less than in the rest of the Valley. There are 88 cities in Los Angeles County. Virtually all of them have lower taxes and provide superior services than the city of L.A. We need the LAFCO study to find out why the 33,000 employees of the city are not providing the level of service we expect and need. Why did the city have to pay $800,000 in late charges to Pacific Bell? Why did the city lose $65 million in the Baldwin Hills Crenshaw Plaza and the Grand Central Market? The Howard Jarvis Taxpayers Association supports the LAFCO study. It believes that the study will, for the first time, open the books and records of the city to public scrutiny. A vote on whether the Valley should be a separate city could be in November of 2000 or more probably the spring of 2002. No matter what happens, this process is good for the Valley and for the remainder of the city. Richard H. Close is an attorney and chairman of Valley Voters Organized Toward Empowerment, a coalition of San Fernando Valley residents, educators, business leaders, community activists and organizations who support studying the creation of an independent Valley city.